What Successful Businesses Spend on Marketing
Marketing Budget Allocation
The allocation towards marketing budgets has been evolving, with a notable shift towards digital platforms. Traditional advertising is seeing a decrease, while social media, new media platforms, and video content are getting more focus. Notably, platforms like Facebook, YouTube, and TikTok are seeing increased investment from marketers. Influencer marketing is also a significant area of investment, with a high percentage of marketers planning to either increase or maintain their spending in this area【5†source】.
Budget Calculation Approaches
Several methods can be employed to calculate a reasonable marketing budget, including:
- Competition-matched budgeting: Spending as much as your competitors, particularly used for calculating digital advertising spend.
- Zero-based budgeting: Starting a budget from scratch each period without referring to past periods, justifying each expense.
- Objective-based budgeting: Building a budget based on specific objectives, without strict cost limitations【6†source】.
Marketing Goals and Channels
Setting your marketing budget can be based on specific marketing goals, such as lead generation or brand awareness. For instance, allocating your budget based on the cost to generate leads or increase brand awareness in your industry can guide how much to spend on various marketing channels like paid advertising, content marketing, and social media marketing【7†source】.
Digital Marketing Cost
The cost for digital marketing varies widely depending on the scope and channels used. Small-to-mid-sized businesses might spend anywhere from $2,500 to $12,000 per month on digital marketing efforts, encompassing activities like email marketing, social media management, and paid advertising【8†source】.
Industry-Specific Spending
Marketing budget as a percentage of company revenue varies significantly by industry. For example, healthcare, technology, and consumer services industries allocate different percentages of their revenue towards marketing. The investment in marketing is seen as a long-term strategy for brand awareness, customer acquisition, and retention, with companies typically spending 8–16% of their revenue on marketing【9†source】.
Digital Marketing Allocation
Digital marketing budgets have been increasing, with paid digital media accounting for about 16% of total marketing budgets. The allocation within digital marketing often goes towards search and display advertising, with online video expected to grow significantly. The pandemic has accelerated the shift towards digital, with many companies observing increased value placed on digital experiences by customers【9†source】.
This breakdown provides a glimpse into the complex landscape of marketing budget allocation across different channels and goals. Each business needs to tailor its marketing budget based on its unique goals, industry benchmarks, and the competitive landscape.
Small businesses employ a variety of marketing strategies and allocate their budgets in numerous ways to enhance their online presence, attract customers, and drive sales. Here are some key statistics that highlight small business spending on marketing:
- Online Reviews and Email Marketing: 84% of consumers trust online reviews as much as personal recommendations, and 45% of small businesses have successfully acquired customers through email marketing, illustrating the power of word-of-mouth in the digital age and the effectiveness of email as a marketing tool【15†source】.
- Social Media Utilization: Approximately 70% of small businesses use Facebook for marketing, indicating the platform’s significant role in small business marketing strategies. Additionally, 57% of small businesses believe social media is the most effective form of marketing, underlining the importance of platforms like Facebook, Instagram, and Twitter for engaging with customers【15†source】.
- Website Traffic Challenges: A concerning statistic is that 31% of small businesses with a website receive less than 100 monthly visitors, pointing to the need for improved digital marketing strategies to drive web traffic and engage potential customers【15†source】.
- Mobile and Digital Trends: The trend towards mobile is also evident, with mobile ad spending expected to increase by 23% in 2021. This suggests that small businesses are recognizing the importance of targeting mobile users as part of their marketing efforts【15†source】.
- Social Media’s Role in Revenue: 41% of local businesses rely on social media to drive revenue, showcasing the critical role that platforms play not just in brand awareness but also in directly contributing to sales. Additionally, 96% of small businesses incorporate social media into their marketing strategy, highlighting its widespread adoption among small business owners【17†source】.
- Consumer Behavior: The research behavior of consumers also impacts small business marketing strategies. For instance, 81% of shoppers research online before purchasing, and 75% of local-intent mobile searches result in in-person store visits within 24 hours, demonstrating the importance of an effective online presence for driving both online and in-store sales【17†source】.
-Digital Marketing Spending: When it comes to spending, 47% of businesses spent less than $10,000 on digital marketing annually, with a notable portion investing more significantly, indicating a wide range of investment levels among small businesses【17†source】.
These statistics underscore the diverse and dynamic nature of marketing strategies employed by small businesses, emphasizing the importance of online reviews, email marketing, social media, and a strong digital presence in driving customer engagement and sales.
